Comparison between the European Central Bank as a New Monetary Experiment and other Major - Central Banks - US Federal Reserve and Bank of Japan

• Author: Tache, I. - Danu, A. L.
• Position: Department of Economic Sciences and Business Administration, Transilvania University of Brasov - Ph.D.student, 'Lucian Blaga' University of Sibiu
• Pages: 295-302

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 7 (56) No. 2 - 2014

COMPARISON BETWEEN THE

EUROPEAN CENTRAL BANK AS A NEW

MONETARY EXPERIMENT AND OTHER

MAJOR CENTRAL BANKS - US FEDERAL

RESERVE AND BANK OF JAPAN

I. TACHE1 A. L. DANU2

Abstract: Our goal is to make a survey of three major central banks

practices and to emphasize both the different national characteristics and the

similarities derived from the global changes of financial environment. Using

a descriptive methodology, the comparison will concern the central banks’

goals, the institutional and organizational structures, strategies and tools of

monetary policy.

Key words: European Central Bank, Federal Reserve System, Bank of

Japan.

1 Department of Economic Sciences and Business Administration, Transilvania University of Braşov.

2 Ph.D.student, “Lucian Blaga” University of Sibiu.

1. Introduction

EMU could be better understood by a

systematic comparison of European

Central Bank (ECB) with other world’s

monetary authorities, such as the Federal

Reserve System of US (Fed) and the Bank

of Japan. Here are some reasons for

choosing these two central banks for

comparison. In the US case, there are some

historical similarities and it is obvious that

the US federal banking system is now

considerably more under pressure and

scrutiny than ever before. The Fed, while

an American institution, is indirectly a

global policy-maker and therefore its

influence is far-reaching. As regards the

Bank of Japan, due to its long-time role as

the source of the cheapest funding

available to financial actors, it has been at

the origin of stock and forex market trends

for about a decade, and its interest rate

policy is one of the fundamental building

blocks of the carry trade with wide-

reaching implications for the world

economy. Our goal is to make a survey of

these central banks practices and to

emphasize both the different national

characteristics and the similarities derived

from the global changes of financial

environment.

The modern Fed traces its establishment

to President Thomas Woodrow Wilson. He

created a team of advisors that crafted the

proposal which ultimately became the

Federal Reserve Act, pas sed by Congress

in 1913. The legislation of that time

imposed the creation of a network of 12

regional reserve banks, headed by seven-

member Federal Reserve Board (FRB) –